One more Vietnamese company to exploit minerals in Laos

 

On behalf of the Lao government, Lao Deputy Minister of Planning and Investment Thongmi Phomsivay has signed a contract with Vietnam’s DaLy company allowing it to mine gold ores at Huoi KHam village in Xangthong district, Vientiane city.

 

The signing ceremony was held in the Lao capital on May 31.

 

The Director General of DaLy, Dang Si Linh, said his company has completed the exploration of the mining site at Huoi Kham and devised a technical plan for exploration with total investment sourced from DaLy.

 

Tax rates on steel, cement, and wood to increase

 

The Tax Policy Department under the Ministry of Finance has proposed raising export taxes on steel and cement products to regulate the profits gained by enterprises because of the low prices of some inputs.

 

For construction steel, the Ministry of Finance has proposed raising the tax to 1.3-2 percent. A three percent rate is also proposed for steel ingots.

 

The ministry also proposed imposing a 5.3 percent tax on cement, and only 5 percent on clinker.

 

It asked the Prime Minister for his ideas on increasing export taxes on wood and wood products to a maximum of 20 percent as China is purchasing more rubber wood from Vietnam.

 

Export taxes on railway crossties or wooden tram rails are set to be increased by 5-20 percent due to a 300 percent surge in the export of these commodities in 2010.

 

Fruit, vegetable exports reach US$213mln 

 

Vietnam has earned US$213 million from fruit and vegetable exports this year, showing an increase of 44.1 percent year on year, according to the Import-Export Department under the Ministry of Industry and Trade.  

 

China, Russia, Thailand and Japan are Vietnam’s major import markets, accounting for over 60 percent of the country’s total fruit and vegetable export turnover.

 

Fruit and vegetable export turnover is expected to reach US$500-510 million in 2011.

 

The country also imported fruits and vegetables worth US$74 million in the first four months of this year, a year-on-year decrease of 5.7 percent.

 

The value of fruits and vegetables imported from China in the first quarter of this year dropped by 15.5 percent compared to the same period last year.

 

Retail sales lose momentum amid high inflation 

 

Vietnam’s retail sales grew at their slowest pace in May as consumers cut back on spending amid rising inflation.

 

Despite the long holiday at the beginning of the month, retail sales only reached VND156 trillion in May, up 0.68 percent from April.

 

This represented the smallest monthly increase in 2011, Vietnam News Agency reported, citing domestic market officials at the Ministry of Industry and Trade.

 

Between January and May, retail sales reached VND762.7 trillion, up 22.5 percent from the same period last year. Discounting inflation and higher consumer prices, the increase only amounted to a 6.4 percent rise in spending.

 

Market offcials said high inflation has forced many consumer to tighten their belts.

 

Even though inflationary pressures have begun to ease, the situation is still complicated due to high interest rates and expanding trade deficit, they said.

 

Vietnam’s consumer price index was up 19.78 percent in May compared to 2010, the General Statistics Office said Tuesday. The jump represented the biggest jump since December 2008.

 

Vietnam has been considered a star due to its fast-growing consumer market. Total retail sales for both commodities and services surged by 24.5 percent in 2010.

 

This year, however, market prospects have been dampened by soaring inflation.

 

In a March report, FTA Research & Consultant said consumers in major Vietnamese cities were following inflationary trends closely. Many respondents reported that if inflation persists, they will have to cut down spending on traveling, clothing, beauty care, home appliances and entertainment.

 

Spending on necessities like education, transportation, food and beverage, electricity, water and healthcare are unlikely to fall, the firm predicted.

 

Home market trapped in credit crunch 

 

A credit crunch has brought the local property market to a standstill.

 

Many homebuyers say they thought they had secured mortgages from banks only to be refused at the last minute. Meanwhile, lenders cited a government order to cut credit for the non-production sector as the reason for the denial.

 

A man known only as Vinh told Tuoi Tre newspaper that when he bought an apartment in Ho Chi Minh City's Binh Tan District, two years ago, he signed a mortgage contract with a bank to help finance the purchase in installments.

 

Vinh now says it's no longer easy to have the loan disbursed. Besides, interest rates have reached a whopping 25.25 percent, compared to home loan rates of around 12.75 perecent two years ago.

 

Many other homebuyers said they had been flatly turned down by banks.

 

Without access to loans to complete their payments, some new buyers have been forced to sell.

 

The situation is even worse for project developers: they cannot find buyers for their housing stock and, at the same time, have to halt new projects due to credit difficulties.

 

Even large real estate companies like Hoa Binh, Lilama SHB and Hoang Anh Gia Lai are caught up in this tough situation, Tuoi Tre reported. Hoang Anh Gia Lai, for instance, now has nearly VND3 trillion (US$146.2 million) worth of housing products awaiting customers.

 

A developer said real estate companies are desperate for cash. They have offered various perks to attract buyers and even lowered prices, to no avail.

 

The State Bank of Vietnam is trying to keep credit growth below 20 percent this year in an attempt to control inflation, which stood at nearly 20 percent in May.

 

Commercial banks have been ordered to cut back on lending to the non-production sector, which includes the stock and real estate markets. The goal is to limit credit in this sector to 16 percent by the end of the year.

 

An anonymous banker said it would be very difficult to achieve this target, at least for his bank.

 

He said non-production loans account for 40 percent of the total credit at his bank and most of them are long-term real estate loans that were brokered prior to 2011.

 

Many banks have since tried to discourage new clients with high interest rates. However, unless they can recoup their outstanding loans, he said, they'll have a hard time meeting the credit growth target set by the central bank. 

 

Aeon heading to Vietnam in 2013: report 

 

Japanese retailer Aeon said it will open retail outlets in Vietnam in 2013, Vietnam News Agency reported.

 

Aeon is currently operating in Malaysia but it plans to expand to other Southeast Asian markets, including Vietnam, Indonesia and Cambodia, the report said.

 

The group seeks to grow sales from Asia to around US$15 billion by 2020, according to Nagahisa Oyama, vice president and chief executive officer of Aeon’s ASEAN business.

 

Aeon is Japan’s second largest retailer and owner of the Jusco retail chain.

 

Steel producers bemoan suggested reserve rules

 

Domestic steel producers have expressed their objections to a draft regulation by the Ministry of Industry and Trade that raises the mandatory steel level firms must keep in reserve.

 

The draft also sets minimum stock levels for other commodities deemed essential, such as pig iron, to minimise the risk of later shortages.

 

Under the draft regulation, firms must keep in reserve at least 10 per cent of the steel and pig iron they imported the previous year – as opposed to 3 to 5 per cent as earlier stipulated.

 

The draft also states that firms must later sell the steel and pig iron they have held back at 10 per cent less than the market price declared by the Finance Ministry.

 

According to the ministry, the cost of pig iron accounts for 80 per cent of the price of the finished steel product. Currently, domestically produced pig iron meets just 60 per cent of local demand. The ministry said the obligatory reserve levels on pig iron and steel were necessary to stabilise prices.

 

However, the Viet Nam Steel Association (VSA) said the draft regulation conflicted with the market mechanism.

 

Pham Chi Cuong, the association's chairman, said annual national production of construction steel was nearly 9 million tonnes, while the market requirement was just 6.3 million tonnes last year. He added that over the last five years, the local market had consumed just 50 to 60 per cent of the steel produced domestically.

 

"Steel should not have to be kept in reserve like essential commodities such as rice, petrol and fertiliser. There is no need to keep steel in reserve as there is a surplus to requirements domestically," he said.

 

Typically, steel makers annually keep in reserve about 500,000 tonnes of pig iron and 300,000 tonnes of construction steel, excluding that stocked by traders. As a result, the volume of pig iron and steel in reserve is far higher than is acknowledged in the draft, according to Cuong.

 

He was also disapproving of the stipulation that steel and iron kept in reserve had to be sold at below the market price.

 

"Though the draft requires commercial banks to offer preferential interest rates and that authorities give tax breaks to importers and businesses investing in warehouse construction, it would create an uncompetitive situation," Cuong said.

 

The association now has 21 pig iron and 31 construction rolled-steel producing members. Cuong said they not only had to compete among themselves but with low-cost iron and steel from China and other ASEAN members.

 

Selling prices differed according to the name of the producer and the quality. This created a competitive climate, he added.

 

Officials had in the past looked into steel and pig iron prices when they had fluctuated in an effort to stop speculation, Cuong said.

 

In a recent letter to the MoIT, VSA said the Government did not have to introduce measures to stabilise market prices.

 

"Because domestic steel production has been able to meet local demand under the market mechanism, regulations are unnecessary," the letter said.

 

Air route to link Can Tho, Con Dao

 

A new air route linking the Mekong Delta city of Can Tho and Con Dao Island in Ba Ria-Vung Tau Province was launched by the Civil Aviation Authority of Viet Nam, Vietnam Airlines and the Can Tho City People's Committee yesterday.

 

The new 200km air route is operated by Viet Nam Air Services Co (VASCO), a subsidiary of the national flag carrier Vietnam Airlines.

 

Bui Ngoc Hoang, director of VASCO, said his company was operating four weekly flights on the Can Tho-Con Dao route on Mondays, Wednesdays, Fridays and Sundays, using the 65-seat ATR72-500 aircraft.

 

The new air service was expected to help promote tourism and pave the way for socio-economic development in the Mekong Delta, Hoang said.

 

VASCO is also operating the HCM City-Con Dao air service with 24 to 28 flights per week using ATR72-500 aircraft.

 

A rubber planting campaign launched in Cambodia

 

Vietnam Rubber Industry Group (VRG) has launched a campaign to plant rubber trees in Sambour district, Kratie province in Cambodia.

 

Present at the launch ceremony on June 1 were Cambodian Deputy Prime Minister Yim Chhay Ly and Vietnamese Ambassador to Cambodia Ngo Anh Dung.

 

Four companies affiliated to VRG will plant 5,100 ha of rubber in Kratie to help the group fulfill its yearly target for around 25,000 ha of rubber.

 

VRG General Director Tran Ngoc Thuan said that the project will help Cambodia promote socio-economic development and strengthen traditional friendship between the two countries.

 

The group has so far invested around US$200 million in Cambodia. The rubber planting project is gaining momentum with the aim of generating steady jobs for more than 7,000 local people, building more than 1,500 houses for workers and 50 wells, hospitals and schools as well as 200km of road and 20 bridges.

 

Rice companies need certificates to export

 

Rice exporters would need certificates from the Ministry of Industry and Trade (MoIT) in order to export as of October 1 this year, said the Vietnam Food Association (Vietfood).

 

Currently, every business is allowed to export rice without having to adhere to industry regulations.

 

Vietfood Chairman Truong Thanh Phong said that his association had asked rice exporters, who met MoIT storage and husking requirements (regulated by Decree ND109/2010/ND-CP issued in November last year), to register early in order to meet the MoIT deadline.

 

Under Decree ND109/2010/ND-CP, rice exporters are required to have a storage capacity of at least 5,000 tonnes and husking facilities with an output of at least 10 tonnes per hour.

 

Storage and husking facilities have to be located in cities and provinces close to rice granaries or international ports to serve rice exports.

 

According to the Ministry of Agriculture and Rural Development (MARD), the country exported 3.5 million tonnes of rice, worth US$1.7 billion, during the first five months of the year, a decrease of 18.6 per cent and 13.3 per cent in terms of volume and value compared to the same period last year.

 

In the first five months of 2011, Indonesia, followed by Cuba, Malaysia and Hong Kong, remained Vietnam's largest rice importer, accounting for 25.5 per cent of total rice export volume.

 

Domestic rice exporters currently are confronted with difficulties in trading in the South Korean and Japanese markets.

 

Domestic air routes see expansion

 

The first day of June has witnessed the inauguration of two new air routes which are expected to tap tourism potential in the south and boost growth in the key central economic zone.

 

Vietnam Air Services Company (VASCO), now flies from Can Tho City to Con Dao island off southern Ba Ria-Vung Tau province, with four flights a week. The duration of each flight is 40 minutes.

 

Located in the Mekong Delta, Can Tho airport annually welcomes over 200,000 passengers, playing an important role in the socio-economic development of the entire region.

 

The new route is the second air link to Con Dao island conducted by VASCO. The first one, connecting the island to Ho Chi Minh City, was launched in 2004 and has enjoyed an annual increase of between 40 and 45 percent to 28 flights every week so far.

 

Also on June 1, Air Mekong and Vietnam Aviation Corporation launched a new air route from Ho Chi Minh City to Quy Nhon city in the central province of Binh Dinh.

 

The flights will be conducted on a daily basis, making it the 11th domestic air route run by Air Mekong. 

 

Exports to Japan pick up

 

Vietnam’s exports to Japan in the first four months of this year earned US$2.8 billion accounting for 10.2 percent of the country’s total export turnover and representing a year-on-year rise of 24.4 percent.

 

Of the export staples, garment posted US$464 million, (up 42 percent), and seafood, US$238 million, (up 5.7 percent). Japan is currently Vietnam’s third largest garment importer, behind the US and EU.

 

According to Vo Thanh Ha, Head of the Northeast Asia Division, the Industry and Trade Ministry’s Asia-Pacific Department, Vietnamese consumer goods, especially agro and seafood products, would generate record profits as the majority of middle-income Japanese earners could afford to buy at reasonable prices.

 

Besides, Vietnam’s raw materials, such as coke, electric cables, electronic spare parts and rubber products are much needed by Japan as it is in the process of restoring infrastructure after the March 11 disasters. 

 

Exporters told to learn EU rules

 

It is essential for Vietnamese exporters to develop the fullest possible understanding of REACH, a European chemical-substances regulation for products exported to the EU, said officials at a workshop May 31 held in HCM City.

 

Under REACH (registration, evaluation, authorization, and restrictions of chemicals), all chemicals produced in large volumes or considered potentially harmful to human health or the environment are subject to registration with the European Chemicals Agency.

 

"A better understanding of REACH will ensure the health of consumers and help producers prevent use of substances of very high concern," said Nudjarin Ramungul, acting director of Thailand's Environment Research Unit, National Metal and Materials Technology Centre (MTEC) & National Science and Technology Development Agency (NSTDA) of the Ministry of Science and Technology.

 

She said consumers are increasingly aware that hazardous quantities of restricted chemical substances in products pose threats to health, safety and the environment

 

She also warned that failure to comply with regulatory requirements could result in costly product recalls and damage to brand reputation. 

 

Japanese firms eye Vietnamese shares

 

A number of Japanese firms bought up shares in Vietnamese companies during the first few months of 2011, recent purchases mainly taking place in the consumer goods and financial sectors.

 

The DI Asian Industrial Fund (DIAIF) recently bought a 25 per cent stake in dairy manufacturer Nutifood, becoming part of its Management Board.

 

Last month Saigon Paper published private offers of 38 per cent charter capital to two Japanese organisations including the Daio Paper Corp and the BridgeHead Investment Fund (Development Bank of Japan).

 

"We had to spend at least six months on research into our Vietnamese counterpart in order to assure its growth potential," said a representative from Saigon Paper partner Nishikawa.

 

Japanese beverage firm Kirin Holdings acquired a 100 per cent stake in Trade Ocean Holdings, parent company of International Food (IFS). Kirin's purchase has enabled it to hold a 57 per cent stake in IFS.

 

The Vietnamese companies, despite their high market shares, met with many challenges. The accumulated loss of Nutifood and IFS during 2010 came to VND46.6 billion (US$2.2 million) and VND266 billion ($12.7 million), while Saigon Paper saw little profit, as reported by financial information website cafef.vn.

 

"Co-operation will promote the expansion of Vietnamese firms into the Japanese market," a source from Nutifood stated. In addition, DIAIF representatives, as members of the Board, will assist Nutifood in corporate management.

 

Under respective agreements, Japanese firms will offer comprehensive support in financial investment, research, market development, technology transfer and human resources.

 

In the financial sector, SBI Securities bought a 20 per cent stake in FPT Securities while Nikko Cordial bought a 15 per cent take in PSI.

 

Work starts on industrial park

 

Asset management firm VinaCapital broke ground on the Ba Thien 2 Industrial Park yesterday in the northern province of Vinh Phuc.

 

The US$65 million, 308ha industrial park (IP), in Binh Xuyen District, will be built in three stages in three years. The development of the first 115ha is due for completion next year.

 

The IP will be equipped with two- to four-lane roads, a power system capacity of up to 126MVA, a drainage and waste water treatment system and a high-speed telecommunications system etc.

 

The first 20ha of the park has already been leased to ceramic tile manufacturer Viglacera Thang Long.

 

Ba Thien 2 IP will be developed with fundings from Vina CPK, a joint venture between Viet Nam Infrastructure Limited (VNI) and CPK Vinh Phuc, of which VNI holds a 90 per cent stake.

 

This is the first project to be carried out in the north by VinaCapital, which manages both companies.

 

Tony Hsun, executive director of VinaCapital, said that the IP would be conveniently located close to Ha Noi's Noi Bai International Airport and the Hai Phong seaport, and would become a destination for multinational companies, particularly those shifting operations from China to Viet Nam due to lower costs.

 

General Director of the Ba Thien 2 IP Hoang Thieu Son said that the park would be developed in a green and environmentally friendly manner, serving light industry, electronics and high-tech sectors with specific regard for sustainable development of the environment.

 

"I believe that the IP would be a good model for developing industrial zones throughout the northern provinces," Son said.

 

Ba Thien 2 IP is one of 20 industrial parks in Vinh Phuc Province, given priority for establishment between 2015-20 as part of Government plans.

 

Vietnam Airlines opens new route

 

Vietnam Airlines (VNA) will officially launch a direct air route between Ha Noi and Kaohsiung, Taiwan, on June 17.

 

This will bring total weekly flights between Viet Nam and Taiwan to 28. The new route will include three flights per week on Mondays, Wednesdays and Fridays. Flights will depart Ha Noi at 18:30 and Kaohsiung at 7:35 (local time) with flight times of around two and a half hours.

 

VNA plans to offer discounted tickets during June.

 

City hosts architecture exhibition

 

The latest developments in the architecture, building materials, and property industries will be showcased at an exhibition that opens today in HCM City.

 

The third Viet Nam architecture exhibition (Vietarc 2011) at the Sai Gon Convention and Exhibition Centre in District 7 has attracted more than 100 exhibitors from 20 countries and territories, including the US, UK, Japan, Singapore, and France. The event would be a platform for networking and exploring business opportunities and developing both local and international partnerships.

 

PwC receives Certificate of Merit

 

PricewaterhouseCoopers (PwC) Viet Nam has been awarded a Certificate of Merit by Viet Nam's Prime Minister for its professional independent auditing and great contribution to the country from 1996-2010. PwC's Chairman Ian Lydall, the only foreign auditor, was given an individual award by the PM.

 

Vietinbank eyes $1 billion in capital

 

Vietinbank (CTG) plans to raise its charter capital by up to 65 per cent to VND20-25 trillion (US$1.22 billion) by the end of this year, chairman Pham Huy Hung told the annual shareholder meeting in Ha Noi yesterday.

 

Vietinbank, the second largest lender in Viet Nam by charter capital, also eyes to increase its charter capital four-fold to $4 billion with total assets of $70 billion by 2015.

 

Vietinbank last year missed the target of raising its charter capital to VND18-20 trillion ($878-975 million) by the end of the year due to delayed foreign investor's capital contribution.

 

When the International Finance Corporation (IFC), a financial arm of the World Bank, finalised its 10 per cent stake deal by the end of March this year, Vietinbank's charter capital increased to VND18.17 trillion ($886.48 million).

 

This year, the Ha Noi-based bank targets to fetch VND5.1 trillion ($248.78 million) in pre-tax profit from VND4.6 trillion ($224.39 million) last year and control its bad debt ratio at under 3 per cent.

 

In a report to shareholders, Vietinbank aims to pay a dividend of 16 per cent, however, chairman Hung said that the bank would try hard to pay up to 20 per cent this year.

 

Hung said that Vietinbank was in a negotiation process with Canadian bank Nova Scotia under the consultancy of JP Morgan and a 15 per cent stake deal was expected to be struck this year.

 

The bank also plans to raise up to $1 billion in an overseas bond issue in the latter part of this year to finance projects and enhance capital for business. The bond will have a maturity of 5-10 years. The Ha Noi-based bank is considering to offer the bond to Asian and European investor groups (excluding investors in the US) or global investors. Vietinbank's share yesterday was up 2.7 per cent to VND26,900 each.

 

List of Vietnamese import, export services provided

 

On 17 May 2011, the Prime Minister issued Decision No 28/2011/QD-TTg providing a list of Viet Nam's import and export services. The list includes transport, tourism, post and telecommunications, construction, insurance, finance, IT and logistics, among others. The decision will be the basis for the Ministry of Planning and Investment to pass a circular on the content. The decision will take effect from July 1.

 

Preferential import tax rate applied to goods

 

On May 18 2011, the Ministry of Finance issued Circular No 68/2011/TT-BTC outlining a special preferential import tax rate for goods originating from Cambodia. The circular lists the goods that will enjoy a special preferential import tax rate of zero per cent. In cases where a higher tax rate is applied, the difference will be refunded. In order to be eligible for the zero per cent tax, goods should have a certificate of origin form S issued by Cambodian authorities and customs clearance as stipulated in Annex II of the circular.

 

Higher fines to be meted out for accounting violations

 

On May 26 2011, the Government issued Decree No 39/2011/ND-CP to amend and supplement Decree No 185/2004/ND-CP dated 04 November 2004 on the sanctioning of administrative violations in the accounting sector. The new circular now includes violations regarding training courses and the issuing of chief accountant training certificates among its administrative violations. In addition, the maximum fine has increased from VND20 million to VND30 million. Individual fines for different violations have been amended accordingly. The decree will take effect from August 1.

 

Gov’t approves Petrolimex equitization plan

 

Deputy Prime Minister Nguyen Sinh Hung has approved a plan to equitize Vietnam National Petroleum Corp, or Petrolimex, which controls 60 percent of the country’s fuel distribution network.

 

As in most cases, the government will keep a controlling stake. It allowed Petrolimex to sell a 2.56 percent stake at an initial public offering, while the government will still own 75 percent in longer term.

 

The approval gave no details on the timing or possibility of foreign participation.

 

The firm's registered capital is VND10.7 trillion ($535 million).

 

In the past four years the privatization process has virtually ground to a halt as market conditions in Vietnam soured when the economy overheated.

 

The government had pledged to step it up again this year.